The Pastry Economics of Television

Why There Should Be Room for 210 Spot Slices on Every Agency’s Diet Plan

Everywhere you look these days you see someone who is trying to make their money work harder for them. People are willing to cut more corners, take the longer road, settle for silver as long as it doesn’t cost as much as going for gold.

But what if you’d get more for your money while still keeping all your corners, taking the direct route, and getting the gold at silver prices?

Well, in essence, that’s what you get for your money by investing in Spot TV rather than Network Scatter, according to the latest SQAD data.

The usual feeling among those who are unfamiliar with Spot is “why should I use Spot TV when I can buy Network for the same cost as the top 20 markets and get the other 190 for free?”

There’s something that you should know about that argument. It’s poppycock.

Looking at A25-54 CPMs in four standard dayparts – Early Morning, Early News, Late Night and Prime – you’re not getting anything for free that way. In fact, you’re usually paying more. For example, if you bought Network Scatter in Late Night, it would cost you 83% more that it would to just buy the top 20 markets. Early Morning and Early News would get you significant discounts as well.

Even in Prime, where Network Scatter often has an advantage, the playing field is absolutely level on a “total footprint” basis of 210 markets. Moreover, if you buy the top 100 markets, the Spot Prime CPM is actually lower than Network Scatter.

If you need an additional spoonful of sugar to help this medicine go down, why don’t we look at this on a TSA level? (This accounts for all the station’s viewing, including the part of the viewing signal that spills outside the home DMA.) In this case, things go from the ridiculous to the sublime.

On a TSA CPM basis, the 210 Market Early Morning Spot TV cost would be 42% below Network Scatter, 31% below in Early News, 60% below in Late Night, and even 25% below Network Scatter in Prime.

The cherry on top would be that the Spot market is healthy – it’s showing double-digit year-over-year CPM growth. So it’s a hot item that you’re getting at a better cost than the convenience store offering of Network Scatter.

Do you still want to tell your client that you don’t want to consider Spot?

Now, before you dismiss all of this as partisan lobbying, consider the independent facts. SQAD costs are based upon actual marketplace costs. They are what they are, and we’re just making sure that they’re noticed. Take a look for yourself and see: http://www.tvb.org/trends/4718

You might almost think of it as similar to when the TV manufacturers introduced HD. They knew what they had would be revolutionary, that they’d change people’s perceptions once they saw it. Now it’s hard to imagine it not being a standard. Well, these SQAD reports should do the same thing. Once you see it, the clarity is hard to ignore.